20160413 Variations on a theme of Adam Smith

Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon Nov 14, 2016 7:29 pm

2016/11/14 Knowledge Forum
Thread: Adam Smith “The Wealth of Nations”
Book 4 Chapter 2 “Restraints On Particular Imports”

The full title of this chapter is:
Begin Quotation:
Of Restraints Upon the Importation from Foreign Countries of Such Goods as Can be Produced at Home
End Quotation.

On this day in 2016, the United States is facing squarely a possible confrontation with the very subject to which Mr. Smith devotes his attention in this chapter. The electorate has chosen, by a slim margin of electoral college votes, a person who has called for massive tariffs on certain goods imported from foreign countries.

In this chapter, Mr. Smith argues that this is a bad idea.

However, the electorate which has spoken massively appears to be objecting to decades of operation of the Capitalist System, which has increased global wealth significantly, but which has delivered body blows to millions of workers in the United States, by reducing or eliminating their ability to provide income for their families.

On page 482, Mr. Smith asserts:
Begin Quotation:
Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command.
End Quotation.

My observation is that in the economy of the United States of 2016, it is rare for an individual to live at all, let alone comfortably, on his (or her) individual efforts. Instead, it appears to me, that almost everyone is dependent upon others for daily bread, let alone the luxuries which so many of us take for granted, such as clean water, breathable air, ample supplies of power, comfortable housing and nourishing food.

In this situation, where the ability to interact successfully with others is critical, and where trust must be freely exchanged between individuals, it seems to me that many persons are prevented from achieving “the most advantageous employment” of whatever his or her capabilities may be.

Mr. Smith does not appear to address the issue at hand in the United States in 2016, in the present chapter aside from his objection to the restraint of particular imports. As I see it, the nature of work has changed so dramatically in recent years, and the need for workers has dropped as automation has assumed an increasing share of the load for simple tasks, so that millions of formerly productive individuals are left with only limited opportunities for lower skill employment, or none at all.

In this context, Mr. Smith's vision of an individual endeavoring to employ his or her capital to the greatest possible advantage seems to me to describe a cruel hoax for millions, who have limited knowledge of the present economy, or personal connections to facilitate group achievement.

Where I hope to end up over the course of these weekly ruminations is with a conclusion that the economy of the planet Earth of 2016 can support a class of distant communities with digital communications reflecting the greater variety of capability of the larger population, while at the same time providing a large and ready market for digital communications from the smaller populations, who may yet offer insights or achievements not occurring elsewhere.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon Nov 21, 2016 5:55 pm

2016/11/21 Knowledge Forum
Thread: Adam Smith "The Wealth of Nations"
Book 4 Chapter 3 Part 1 "Restraints on Imports"

Mr. Smith is opposed to restraints on trade in general. In this chapter he discusses several kinds of restraint on trade, including that which occurred when to nations were so at loggerheads that each prohibited trade with the other by imposing massive tariffs if not prohibiting trade altogether.

This week, rather than discussing the chapter, I'd like to focus on one element of Smith's discussion: smugglers

The practice of smuggling is alive and well in 2016. Products that are moving across national borders include drugs of all kinds, as well as arms and military supplies. It is my impression that smuggling of ordinary consumer goods is not happening across United States borders on a significant scale, with the possible exception of tobacco products which are reported to be moving between states. Services that are (apparently) moving across borders include (what amount to) slaves and indentured workers of various kinds.

I bring this up in the context of Solar System communities away from Earth, and even communities moving away from Earth in large habitat cities.

Human nature being what it is, I can well imagine that there will be people who will oppose trade in various products and services between communities away from Earth, at the same time as there will doubtless be people who will see some advantage in supplying (or buying) prohibited goods and services.

Science fiction writers have been trying to imagine how various future societies might attempt to control introduction of prohibited items. Artificial Intelligence systems are favored as tools to help to detect prohibited material items and even people. It is challenging for me to see how smuggling would work in a digital economy. When settlements/communities are far enough distant from each other so that physical trade is impractical, digital exchange of entertainment and useful information is quite likely to occur. Human nature being what it is, I have to assume individuals will try to exploit others via the digital medium.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Tue Nov 29, 2016 7:33 pm

2016/11/28 Knowledge Forum
Thread: Adam Smith "The Wealth of Nations"
Book 4 Chapter 3 Part 1 "Restraints on Imports"

This week, rather than discussing the chapter, I'd like to focus on one element of Smith's discussion: balance of trade

In a digital economy, such as might be expected when human communities are separated by great distances, whether within the Solar System or beyond, I would imagine the concept of Balance of Trade will exist, but it will be even more subjective than is the case with physical objects on Earth today.

What seems to me quite likely is that there will exist entities (presumably groups of humans but possibly artificial intelligence) which will represent remote communities on Earth, and (presumably) in the remote communities themselves, to represent Earth and other communities.

Certainly in the case of the Earth, I would expect that (assuming humans are the representatives) their interest would be to arrange for trade of digital files in both directions, so that the expenses of maintaining the station can be met, at the very least, and (presumably) so that a net profit can be accumulated to help the station to weather dry spells, when supply of useful or at least desirable files may be reduced on one side or the other.

InterstellarNet: Origins
InterstellarNet: Enigma
InterstellarNet: Origins
by Edward M. Lerner

I've ordered the set of books listed above, in hopes Mr. Lerner's vision will include a few glimpses of how he imagines a digital economy might work. My recollection from having read the series when published in Analog (Science Fact and Fiction) is that the bulk of the material is of a fanciful nature involving a variety of imagined alien races and some clever time travelling master minds. However, there should be a few aspects of the story that might have value in forecasting a digital economy that might be achieved by people on and away from Earth.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon Dec 05, 2016 5:58 pm

2016/12/05 Knowledge Forum
Thread: Adam Smith “The Wealth of Nations”
Book 4 Chapter 3 “Restraints On Imports”

The full title of this chapter is:
Begin Quotation:
Of the Extraordinary Restraints upon the Importation of Goods of Almost All Kinds, from those Countries with which the Balance is Supposed to be Disadvantageous
End Quotation.

Part 1 of this Chapter includes a lengthy presentation on and discussion of the concept of what Mr. Smith refers to as “bank money”. I gather that in his time, the use of such money was not universally understood or accepted, but in 2016, in the United States and much of the world, it is possible and indeed, not uncommon, to live comfortably and efficiently without physical money. Changes have come rapidly as more and more citizens acquire Internet capable hand held computers.

I gather that in his time, Mr. Smith was arguing against restraint of trade with his peers, many of whom (I deduce) were busily engaged in the practices against which Smith is arguing.

In 2016, restraint of trade still exists. My impression is that the United States has lowered barriers to a level which is perceived by some to be disadvantageous to the United States, while numerous other nations are maintaining barriers which it is thought by some should be lowered.

In the recent presidential election campaign, both candidates took position in opposition to a proposal called the 'Trans-Pacific Partnership'.

https://en.wikipedia.org/wiki/Trans-Pacific_Partnership

According to the Wikipedia article above (reviewed 2016/12/05) the agreement has been in process for seven years, and it has moved on from “acceptance” to the ratification stage.

The incoming US administration's leader has threatened to pull the US out of the agreement, but it appears to me that the agreement can proceed without the United States, in which case tariffs against the United States would (presumably) remain in force.

I will now try to imagine how restraint of trade would “work” in an all digital economy, such as I am expecting to come into existence within the Solar System and certainly beyond it.

Restraint of trade could be imposed by preventing or by controlling the electronic communication I am presuming will be the main pathway for a digital economy. Such restraints might be imposed at any node in the network, but they would be most concerning if imposed at the Earth communications facilities.

In 2016, as the dispute over the TPP shows, individuals and organizations are willing to use trade as a way to impose their values upon others.

I can readily imagine such a scenario taking place in the future, with an all digital economy.

It is even possible that confederates in two separated nodes might find it beneficial to collaborate in restricting trade on one side or the other.

Where I hope to end up over the course of these weekly ruminations is with a conclusion that the economy of the planet Earth of 2016 can support a class of distant communities with digital communications reflecting the greater variety of capability of the larger population, while at the same time providing a large and ready market for digital communications from the smaller populations, who may yet offer insights or achievements not occurring elsewhere.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Sun Dec 11, 2016 5:53 pm

2016/12/11 Knowledge Forum
Thread: Adam Smith “The Wealth of Nations”
Book 4 Chapter 3 “Restraints On Imports”

The full title of this chapter is:
Begin Quotation:
Of the Extraordinary Restraints upon the Importation of Goods of Almost All Kinds, from those Countries with which the Balance is Supposed to be Disadvantageous
End Quotation.

Rather than continue with discussion of Chapter 3 this week, I'd like to point out a discussion of economics that includes a reference to Adam Smith's "Invisible Hand"

The reference is included in a review of the book: I, Pencil: My Family Tree as Told to Leonard E. Read
https://www.amazon.com/Pencil-Family-Tr ... k+i+pencil

If the link above fails, a search at Amazon for Book+i+pencil should deliver an ebook of the title.

http://www.wnyc.org/story/who-needs-handwriting_radio/

In addition to the Smith reference, the radio program cited above (and the book I, Pencil) adds perspective to Dr. Dartnell's theme in "The Knowledge" about the complexity of systems that have evolved over centuries, and in some cases, thousands of years, that ultimately lead to manufacture of objects such as pencils.

I am interested in the mechanisms by which the systems that have evolved in a population of billions of people over thousands of years can be replicated in a population of (for example) one million people in a location away from Earth.

A pencil could (presumably) be "manufactured" by an atom assembler, using Carbon, Copper, Hydrogen, Nitrogen, oxygen, and quite likely other elements.

The time needed would (presumably) compare to the time required for a tree to grow a pencil sized branch.

In this situation, the principles of Division of Labor would tempt manufacturers to try to accelerate delivery time by dedicating particular atom assemblers to manufacture of components for which they might be better suited, and then employing robotic assemblers as needed to deliver the finished product.

Never-the-less, for a population of even as few as a million, it might prove most efficient to simply build/deploy enough atom assemblers to deliver the number of pencils needed by the population.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon Dec 19, 2016 8:34 pm

2016/12/19 Knowledge Forum
Thread: Adam Smith “The Wealth of Nations”
Book 4 Chapter 3 “Restraints On Imports”

The full title of this chapter is:
Begin Quotation:
Of the Extraordinary Restraints upon the Importation of Goods of Almost All Kinds, from those Countries with which the Balance is Supposed to be Disadvantageous
End Quotation.

Rather than continue with discussion of Chapter 3 this week, I'd like to consider a column by the writer George Will, who cites Mr. Smith at the conclusion of his exposition.

http://www.dispatch.com/content/stories ... w-off.html

Begin Quotation from closing paragraph:
...for many wealthy people, "the chief enjoyment of riches consists in the parade of riches." So wrote Adam Smith in "The Wealth of Nations," published in the resonant year of 1776.
End Quotation

Mr. Will has chosen as the theme for this column the dilemma of Howard Schultz, CEO of Starbucks coffee chain, who while building out a network of shops that will very likely outnumber McDonald's restaurants in the near future, would seek to maximize profits by stimulating wealthy patrons to visit exclusive shops called "Roasteries" which are intended to provide an "ultra-premium" experience.

In the column, Mr. Will reviews the progression of society from meeting basic needs through achieving affluence for a significant part of the population. I am interested in Adam Smith and the entire field of economics, because it seems to me that there must surely be a way to organize human affairs so that the basic needs of everyone can be met in a way that still allows for those who desire luxury to have access to that experience.

In calling out the Fred Hirsch concept of the "positional economy" as distinguished from the "material economy" it seems to me that Mr. Will is hovering on the general vicinity to an understanding of how human society can organize itself to meet the needs of everyone for basic material supplies, while at the same time meeting the needs of many to feel superior to others.

Since I live in a largely capitalist society, I am experienced in the challenges of competing with others for income earning opportunities. In surviving cutbacks of employee count at large corporations, I have both experienced the lopping process, and survived it while watching perfectly worthy co-workers depart.

I am constantly asking if there is a way to continue the competitive environment which maximizes performance of specific teams of people, while preserving the dignity of those who are not chosen or whose efforts are considered unworthy of continued support by a particular team. It seems to me, as I look out at the society of 2016 around the world, that while there exist a few societies which do a decent job of achieving the conditions described earlier in this paragraph, the United States is most certainly NOT one of them.

A group of people, often called "Republicans" or perhaps, "conservatives" seem to value something called "work" which they claim provides value both to individuals and society as a whole. However, it seems to me from general observation, that there is a tendency for some members of this group to employ the capitalist tactic of offering the lowest possible compensation to human beings they might seek to hire to perform tasks in furtherance of their economic activities.

A necessary and inevitable consequence of the application of the capitalist principle to drive wages as low as possible is that human beings who are unaware of any alternative way of securing material needs will be driven to accept them. A typical and very common example of this principle at work in the United States of 2016 is the millions of human beings whose livelihoods are reduced as their employers compete with other employers in other nations, where the population is observed to live at a lower level, and thus are willing to accept lower compensation for their efforts.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Tue Dec 27, 2016 4:06 am

2016/12/26 Knowledge Forum
Thread: Adam Smith “The Wealth of Nations”
Book 4 Chapter 3 “Restraints On Imports”

The full title of this chapter is:
Begin Quotation:
Of the Extraordinary Restraints upon the Importation of Goods of Almost All Kinds, from those Countries with which the Balance is Supposed to be Disadvantageous
End Quotation.

Part 2 of this Chapter includes a number of thoughts/ideas/admonitions/gems-of-wisdom, to that I consider this series of pages, from 520 through 532, to be one of the most valuable sections I have seen so far. The overall theme is familiar, because Smith advocates for free trade, and against policies that seek to advantage one local subgroup over another. However, I note here key points that caught my attention:

Page 521: “The whole doctrine of the balance of trade is absurd”
Page 521: “But that trade … without force …. is always advantageous … to both”
Page 521: “...increase of the annual revenue of its inhabitants”

Page 527: “The violence and injustice of the rulers of mankind is an ancient evil, ...”
Page 527: “...monopolizing spirit of merchants and manufacturers, ...”
Page 527:
Begin Quotation:
In every country it is always and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.
End Quotation.
Page 527: “... had not the interested sophistry … confounded the common sense of mankind”
Page 527: “The wealth of a neighboring nation … is certainly advantageous in trade.”

Page 528: “This very competition, however, is advantageous to the great body of the people, ...”
Page 528:
Begin Quotation:
A nation that would enrich itself by foreign trade, is certainly most likely to do so when its neighbors are all rich, industrious and commercial nations.
End Quotation.

Mr. Smith closes this chapter with a crescendo of crucial concepts:
Page 531:
Begin Quotation:
There is another balance, indeed, which has already been explained, (40) very different from the balance of trade, and which, according as it happens to be either favorable or unfavorable, necessarily occasions the prosperity or decay of every nation. This is the balance of the annual produce and consumption.
End Quotation.

On page 532, Mr. Smith cites the North American colonies as exemplifying the very principle he has been elucidating. I deduce that in his opinion, the North American colonies have been importing more than they have been exporting, and they have been accumulating a debt, while at the same time, their real wealth has been increasing at a dramatic pace.

Where I hope to end up over the course of these weekly ruminations is with a conclusion that the economy of the planet Earth of 2016 can support a class of distant communities with digital communications reflecting the greater variety of capability of the larger population, while at the same time providing a large and ready market for digital communications from the smaller populations, who may yet offer insights or achievements not occurring elsewhere.

(th)
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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon Jan 02, 2017 8:06 pm

2017/01/02 Knowledge Forum
Thread: Adam Smith “The Wealth of Nations”
Book 4 Chapter 4 “Of Drawbacks”

In this short chapter, Mr. Smith describes in some detail, the nature and practice of drawbacks of duties paid on imports in his time.

I imagined, after reading the chapter, that such practices must surely be obsolete in 2016/2017, but to my surprise, Mr. Google reveals that they are alive and well today,

A search for "duty drawbacks definitions" gave "about 394,000" results, including Wikipedia's definition:

Begin Quotation:
Drawback, in law in commerce, paying back a duty previously paid on exporting excisable articles or on re-exporting foreign goods. The object of a drawback is to let commodities which are subject to taxation be exported and sold in a foreign country on the same terms as goods from countries where they are untaxed.
End Quotation.

Management of drawback regulations might be a business opportunity, so I am not surprised to find that Fedex Corporation has a subsidiary offering related services:
Begin Quotation:
ftn.fedex.com/us/services/drawback.shtml
FedEx Trade Networks offers the duty drawback expertise and experience you need, whether you are filing a claim or establishing a new drawback program.
End Quotation.

Mr. Smith is generally in favor of free trade, so he seems to approve of drawbacks as a way of removing an obstacle to free trade.

***
My purpose in study of Mr. Smith's opus is to try to understand how an economy on the scale of the Earth of 2016/2017 works (unlikely as such understanding may be), and from that to deduce how greater benefit might accrue to members of the population on Earth today, but also, to try to deduce how a digital economy of the not too distant future might work.

Based upon historical precedent, it seems possible that duties will be imposed upon the flow of information between Earth and remote communities if control over the flow of information can be established. Control may not necessarily be maintained by government agencies. For example, if factors come into existence to represent remote communities on Earth, the flow of information between the factors and their clients may be encrypted, so the factors will be able to control the flow of information from the remote entities. In that case, the factors would naturally accrue to themselves a percentage of any profit they are able to secure for their client.

On the other hand, if a government exists on Earth at the time, then it seems inevitable that a government within whose jurisdiction the factor operates will demand a payment of duty.

By deduction then, I presume that if a government collects a duty upon import of a set of information, then it might agree to refund all or part of such duty if the information is exported to a third community. However, since the cost of information will then be the cost of the facilities for transmitting the information, rather than the cost of the information itself, it is difficult for me to see what the benefit of a drawback might be.

Control of a government over exports by a factor seem to me to be possible, since the process of transmitting information away from Earth will be easy to monitor. Conceivably governments might impose a fee upon transmissions, and indeed, governments will need funds to maintain the surveillance service in the first place. However, protection of the assets of the factor population will be a cost which must be borne by the factors as a cost of doing business.

At the moment, I do not see how the practice of drawbacks on duties would benefit anyone in such a digital economy, but it seems likely enterprising persons will look for ways to reduce the impact of government fees upon their activities, and perhaps they will be able to persuade legislators to grant drawbacks of part or all of duties in special cases, such as for favored remote communities.

(th)


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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Mon Jan 09, 2017 6:29 pm

2017/01/09 Knowledge Forum
Thread: Adam Smith “The Wealth of Nations”
Book 4 Chapter 5 “Of Bounties” (Part 1, not including Digression Concerning the Corn Trade

In this long chapter, Mr. Smith describes in some detail, the nature and practice of bounties contrived to be paid upon exports of various commodities.

His discussion includes corn and fisheries. My sense of this section of the chapter is that Smith disapproves of bounties as he has observed them, with the sole exception of bounties issued to insure the continued existence of materials considered essential to the national defense, or skills and equipment such as sailors and ships.

In this chapter Smith makes another argument for the significance of corn as a determining factor in the value of other goods, such as gold and silver.

Smith makes the point in a variety of ways, that such practices as bounties benefit a small group of people at the expense of a much large population taken as a whole.

It occurred to me while studying this chapter, that the subsidies provided by the government of China in recent times, to encourage various industries they wish to develop, are often the subject of irate tirades by persons in the United States, who are presumably arguing on behalf of particular groups within the population of the United States, while discounting the benefit of Chinese generosity to the greater number of members of the United States population.

The central failing of the United States economy as I see it, is the unwillingness to maintain a bench of workers as any sports team in the United States maintains a bench of players.

As I understand the capitalist philosophy which is articulated by some persons in the United States, it is the responsibility of a worker to prepare him or herself for employment, and to seek out opportunities to earn income where such opportunities may exist. Due to imperfect communication which I observe to exist in the United States (and quite likely other nations on Earth in 2016/2017) it is clear to me that great numbers of citizens are unable to identify opportunities which may exist for which those citizens may be prepared, or to prepare for opportunities which are advertised.

However, every person who draws breath is capable of functioning as a consumer, and more than one science fiction writer has imagined a time when the great bulk of a population will be "employed" as consumers, whose duties would include specifically picking winners and losers in the capitalist system, and thus contributing to the constant refinement of production and offerings.

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Re: 20160413 Variations on a theme of Adam Smith

Postby tahanson43206 » Fri Jan 13, 2017 8:34 pm

20170113 Discussion of Policy for HUD Secretary

The purpose of this thread, taken as a whole, is to attempt to gain at least SOME understanding of how economies of various kinds work or fail, and particularly how the economy of the United States in 2016/2017 works well where that is the case, and poorly where THAT is the case.

http://www.dispatch.com/content/stories ... arson.html

As part of the process of setting up a new administration to work with and to support President Elect Donald Trump, the US Senate has been "interviewing" candidates for various positions.
Dr. Ben Carson was nominated for Secretary of the Department of Housing and Urban Development.

Senator Sherrod Brown (Ohio, Democrat) posed questions to Dr. Carson, and since Dr. Carson is Republican, it is not surprising (to me at least) that he articulates points of view that are associated with Republicans.

The article cited above (by Jessica Wehrman) reports on the exchange between Carson and Brown, and I cite in particular these passages:

Begin Quotation:
I support creating an environment that encourages entrepreneurial risk-taking and capital investment, which are the engines that drove America from no place to the pinnacle of the world in record time."
End Quotation.

I found this to be an unsatisfying answer, since it is not the role of the HUD Secretary to create an environment for capitalists. I see the role of the HUD Secretary as creating an environment for his employees that is sufficient to satisfy their immediate and long term needs. It seems to me that a "traditional" capitalist (as opposed to an "enlightened" one) has no interest at all in the needs or concerns of workers, and is instead driven by ideology and necessity to find workers who are desperate and willing to work for starvation wages, without benefits of any kind.

Later on, Senator Brown inquired about employers failing to pay overtime for workers classified as "managers" so they could be asked to work more than 40 hours per week with no overtime payment. Carson's answer was once again unsatisfying to me:

Begin Quotation:
You create the right environment that employers have to pay them more because the competition will require it of them.
End Quotation.

Once again, I see this response as inappropriate for the Secretary of HUD, since his office has no role in "creating the right environment" as he describes.

Instead, the HUD Secretary can insist that contractors working for HUD pay workers overtime if they work more than 40 hours per week, and they do not receive compensation sufficient to qualify them as "exempt" employees.

However, taking Dr. Carson's position at face value, it seems to me that a way of creating the environment he describes is to pay workers a wage that is sufficient to attract them away from employers who are unwilling to pay a living wage, or overtime.

At the present time, as I look out at the global economy, and at the US position within the global economy in particular, I do not see that there are positions available for the available workers. This state of affairs has existed before. Adam Smith describes it in his opus, in connection with the difficulty in his day, of dealing with persons who are unemployed in provinces of the British establishment. There existed at that time prohibitions against workers coming into certain areas, so the government of the time enacted laws requiring provinces to support their indigent residents.

A solution being considered in various places around the world is to offer a Basic Income to all residents. This would have the happy effect of placing a floor under workers, so that they need not accept the conditions which would be imposed by unbridled capitalists of the "unenlightened" variety.

Thus, employers who would wish to employ workers would be persuade of the wisdom of offering more than the level of the Basic Income, to entice workers to assist them with their undertakings.

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